Many people are asking how this new tax bill will affect them and their finances. In this email I’ll try to give you a synopsis of the main features of the tax bill and how you may feel it’s consequences.
First off, the law does not go into effect until 2018 so you won’t see any changes for this tax season. Also, it’s important to note that most households will get some tax relief in the coming years, so while it does complicate things, it generally will not have substantial negative consequences for you.
The standard deduction will almost double for 2018, so fewer people will itemize their tax deductions. This means that itemized deductions, such as charitable contributions, will not help the tax situation for many of us. Because of this, you will want to make any potential charitable contributions this year (before 2017 ends); don’t wait until 2018 to make those contributions if you can make them in 2017.
Another feature that will affect many of us stems from the limit on state income taxes and property taxes in 2018. Those two, aggregated, will be capped at $10k. As such, pay that second installment of the 2017/2018 property tax bill in 2017. http://www.sdttc.com/content/ttc/en/tax-collection/pay.html
A few other things to note: the health care requirement and penalty doesn’t end until 2019; mortgage interest deduction is capped at a total mortgage balance of $750k; you can still sell your primary residence and the gain is tax free up to $250k/$500k (single/married); a lot of miscellaneous itemized deductions are eliminated (moving costs, etc.).
Lastly, here are some good links:
1. Graph showing effect by income level: http://on.mktw.net/2l0NdxT
2. Simple calculator to estimate effects of the tax bill: http://taxplancalculator.com/
I hope that gives you a general idea about this new law and we can certainly discuss in more detail during tax season.